• Australian (ASX) Stock Market Forum

FRI - Finbar Group

Discussion in 'Stocks 0-H' started by mccollr, May 4, 2010.

  1. mccollr

    mccollr Member

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    Anyone have any thoughts or comments on this stock.

    Been on my watchlist for a while.

    rod
     
  2. robusta

    robusta Well-Known Member

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    Bought a piece of FRI today.
    No debt, good ROE, great growth prospects, long history of good capital management. Steep discount to intrinsic value.
    I value it at $1.80. Good dividend as well, looking to hold this one long term.
     
  3. mccollr

    mccollr Member

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    Thanks for that summary. Similar to what my research is saying. I got in last month as a long term hold.

    Rod
     
  4. robusta

    robusta Well-Known Member

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    Yes I wouldnt even look at this one short term - not much liquidity. However very happy to put in the bottom drawer and collect dividends and capital gains.
     
  5. ChrisV80

    ChrisV80 Member

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    I'm with you guys, I get an intrinsic value of around $1.90 with that growing by about 13% next year.. I think I might buy for long term as well.

    With the current share price hovering around $1.00 if it takes a while to catch up it will still be a nice gain, plus the 7% fully franked dividend will do me fine in the meantime.

    Anyone else with a view on Finbar? any feedback would be appreciated.
     
  6. mccollr

    mccollr Member

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    Finbar Group lifted revenues 179.4% to $155.0
    million for the year to 30 June 2010. Net profit was
    24.7% higher at $23,561,832 (14.5 cents per share). As
    previously reported, the final dividend of 5.5 cents will
    raise the annual rate 7.1% to 7.5 cents.
    The net operating cash surplus was $65.0 million -
    compared with a deficit of $46.5 million in 2009 - but
    those figures just reflect the timing of investments in
    projects and their final settlement.
    The company currently has interest bearing debts of
    only $77.2 million - and cash of $41.5 million - but that will
    change as it commences new projects with an end value
    of $615 million.
    Finbar Group expects to complete and settle 275
    residential apartments at the Edge and Times Two over
    the current year with profits at “similar levels” to 2010.
    It is also looking “to achieve further earnings growth in
    the 2012 financial year”.
     
  7. awg

    awg Well-Known Member

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    You guys got any additional sources of info, other than the Company website?

    FRI comes up high-ranked on many fundamental scans, however the lack of trading liquidity issue dissuaded me from further research.

    Checking there webiste shows a nice simple business model with good short to medium prospects
     
  8. robusta

    robusta Well-Known Member

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    Not sure where you can find additional sources of info but the annual report is pretty comprehesive.

    If you are thinking short to medium term prospects (I agree they are pretty positive), I would keep on looking for another stock. Any bad news may burn you due to the lack of liquidity.

    If you were thinking long term I cant find many better looking companies. FRI is in my opinion very undervalued and the intrinsic value is rising at a satasfactory rate for at least the next couple of years. :2twocents
     
  9. robusta

    robusta Well-Known Member

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    Finbar in trading halt today pending announcement of Capital Raising by Bell Potter Securities.

    I think all current projects are funded so probably an announcement of a new project is also in the wings.

    The last time this happened was in March along with new project in Karratha.

    The thing that annoys me is capital raising will probably be restricted to intitutions and sophisticated investors. :mad:
     
  10. ParleVouFrancois

    ParleVouFrancois Well-Known Member

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    Offsetting the lack of participation, the project would have to be pretty impressive re: the financials of it for management to dilute for it.

    :2twocents
     
  11. robusta

    robusta Well-Known Member

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    Thankyou. In light of Finbar Groups long history of good capital management I should probably take the glass half full point of view.

    If FRI issues x ammount of shares (last time it was ~20 mil) at ~ $1.15 - $1.20 per share it will dilute my holding but raise the equity per share. If this is to fund a new project and that project returns a satisfactory ROE then things should work out OK. Will have to wait and see.
     
  12. ParleVouFrancois

    ParleVouFrancois Well-Known Member

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    I guess I'll extrapolate my view a bit more, I don't hold FRI but they look decent, my view on this CR is similar to some of the N American oilers listed on the ASX (AUT and SEA) both had recent capital raisings to sophisticated and institutional investors. It took me a while to realise that CR's can be very positive for a small company (as opposed to something of a last resort, which is more common with larger companies in the ASX 100/200):

    AUT had there's at $1.25 and SEA had it at $0.51, both very recent (within a month or two) and both are now trading a fair bit above the raising price, imo it's because the rate of return on equity in these companies will be north of 50% p.a. if the cash is deployed in building a well, thus the market will rerate them as long as the rate of return remains that high (related to the price of oil) and as long as the capital can be deployed (only a certain amount of acres).

    So applying the same sort of logic to FRI, as long as the return on equity remains high as it has been, and the capital can be deployed, and a few other factors willing (e.g. the sophisticated + institutes don't sell out for a small % profit) FRI's intrinsic worth should be boosted by the recent raisings, and although you don't get to participate (which would've made it a double whammy of positive), at least the shares you're currently holding should increase in value, this along with the now well funded company, should trigger a small rerating in FRI (obviously needs one because you're in it Robusta, good value to be found here eh? :)).

    :2twocents
     
  13. robusta

    robusta Well-Known Member

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    I could not agree more, it is hard to believe how many companies in the ASX200 have such poor cashflows.

    That is interesting I have never thought about it that way. As long as the rate of return on the new equity is satisfactory and they can continue to reinvest about half the profits at about the same return plus the new capital FRI will come to the attention of more investors.

    I would still love to be involved in the capital raising however, I think FRI is worth ~ $1.90.
     
  14. robusta

    robusta Well-Known Member

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    Well now I have my answer.

    "Finbar plans to step up development activity on iss Karratha project and continue to bolster its Perth project pipeline following the completion on a $28.67 million placement and confirmation of a fully underwritten $13.94M share purchase plan.

    The spp will be at $1.15 up to a maximum of $15,000 per shareholder.

    Happy days :D
     
  15. ParleVouFrancois

    ParleVouFrancois Well-Known Member

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    There you go Rob, I've given you a new way to look at the CR (positive even if you don't get to participate), and for the icing on the cake they'll let you in on the deal :D.
     
  16. ROE

    ROE Well-Known Member

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    That is a bit naughty of them

    I hold 100 shares and I can buy $15000 more regardless of my holding

    haven't they learn the Stephen Mayne trick :D

    I don't have any by the way but good luck hope you do well
     
  17. Intrinsic Value

    Intrinsic Value Well-Known Member

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    I bought in at 1.05 five months back.

    I think it looks pretty good if you like the story in WA which is where I am located.
     
  18. So_Cynical

    So_Cynical The Contrarian Averager

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    Finbar made my next entry short list today...easy to see the SP rallying away after the SSP is settled, lots to like about a simple business model like Finbar's, still have to say im a little weary of WA property as its still very soft.
     
  19. robusta

    robusta Well-Known Member

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    WA property prices have been very soft for a few years, in this enviroment FRI have recorded three consecutive years of record profits.

    Finbar are the number one apartment developer in WA, until now concentrating on Perth and surrounding suburbs. The WA gov estimate the need for approx 328,000 new homes by 2031 and have mandated 47% (~154,000) to be infill, medium to high density.

    This capital raising and SPP is to facilitate the fast tracking of the Karratha "Pelago" development that will have approx end value of $225,000,000. Finbar have stated this is start of a long term focus on the Pilbara.

    "Karratha is an administrative centre of resources activity and a town which is experiencing an inability of new housing supply to keep up with accomodation demands"

    A quick look at real estate prices in Karratha will reveal standard suburban 3 bedroom houses selling for $800,000+ and yielding $1000+ per week rent.

    As with any investment there are risk's (interest rates, housing bubble...) so please DYOR.

    I may still participate in the SPP @ $1.15 but today I picked up a nice little parcel of shares @ $1.13 - Happy Days :D
     
  20. So_Cynical

    So_Cynical The Contrarian Averager

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    That fact that i have money to go into a new position and i didn't have a buy order in the FIN cue today speaks volumes about my uncertainty's with this company...i had a good look at them over the weekend and like alot of stocks favoured by value investors, i came away thinking they have a high ROE because they don't actually own anything.

    They have a staff of 8 and get fees from doing RE deals mostly with JV partners, all the debt is at project level but there's no real recurring cash flow...they have to keep churning over the deals and developments.

    Perth is a small city and there's only so many apartments that can realistically be built...15 minutes drive from Perth airport and your driving pass cows in paddocks...there's alot of undeveloped land in Perth but no one wants to live more than 40 minutes from the beach.

    And there's only so many Sand-groper's willing to pay $800.000 for a unit.
     
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